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Microsoft is shaking up of its beleaguered Windows division. The move follows problems that led the world’s biggest software company to delay the launch of the consumer version of its latest operating system until next year.

Microsoft said it would reorganise its platforms and services division – one of three core units divisions created by chief executive Steve Ballmer, the chief executive, in September – into eight business units in order to “deliver the best possible experience to customers”.

A shake-up had been widely expected after Microsoft announced earlier this week that engineering problems had forced the company to delay the launch of its next-generation Vista operating system until after the holiday shopping season.

“This is the other shoe dropping,” said Roger Kay, an analyst at Endpoint Technologies. “Missing the holiday season in 2006 was just unacceptable.”

The reshuffle comes at a sensitive time for Microsoft. It is trying to sharpen its competitive edge as it confronts Google, the internet search group, and other rivals whose web-based services are challenging the company’s dominance of the software market.

Kevin Johnson, co-head of Microsoft’s platforms and services division, said in a memo to employees that the shake-up was “intended to help us increase our agility, embrace the concept of software [and] services, and position us for an exciting future”.

Steven Sinofsky, the head of Microsoft’s Office software business, will take charge of a unit responsible for Windows and Windows Live. He will oversee development of all future versions of the Windows operating system.

Jim Allchin, the Microsoft veteran who has been spearheading the Vista project, and Mr Johnson, former head of Microsoft’s global sales and marketing, will continue to share responsibility for the platforms and services division until Mr Allchin retires next year.

Other changes reflect the new priorities laid out by by Bill Gates, Microsoft chairman, in November. He said then that the company would work to develop more advertising-supported “free” services over the internet to better compete against Google and other rivals.

Microsoft said yesterday it would create a new online business group that would be responsible for its move into online advertising, a direct challenge to Google.

Will Poole, former head of Microsoft’s Windows Client business, will lead a new unit focused on new devices and emerging markets.

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